McGraw Corp

question 61

Essay

McGraw Corp. owned all of the voting common stock of both Ritter Co. and Lawler Co. During 2013, Ritter sold inventory to Lawler. The goods had cost Ritter $65,000, and they were sold to Lawler for $100,000. At the end of 2013, Lawler still held 30% of the inventory.
Required:
How should the sale between Lawler and Ritter be accounted for in a consolidation worksheet? Show worksheet entries to support your answer.

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Definitions:

Facial-Feedback

The hypothesis that facial expressions can influence emotional experiences, suggesting that smiling can make one feel happier.

Metabolizes Food

The biochemical process by which organisms convert ingested food into energy and building blocks for growth, repair, and maintenance.

Muscle Tissue

A specialized tissue in animals designed for contraction, which aids in movement and force generation within the body.

Fatty Tissue

Connective tissue composed primarily of adipocytes, used for energy storage, insulation, and cushioning of the body.